TIDMCLI
RNS Number : 3673H
CLS Holdings PLC
17 August 2016
CLS HOLDINGS PLC
("CLS", THE "COMPANY" OR THE "GROUP")
ANNOUNCES ITS HALF-YEARLY FINANCIAL REPORT
FOR THE 6 MONTHS TO 30 JUNE 2016
BENEFITING FROM GEOGRAPHICAL DIVERSITY
CLS is a FTSE 250 property investment company with a GBP1.5
billion portfolio in the UK, Germany and France offering
geographical diversification with local presence and knowledge.
FINANCIAL HIGHLIGHTS
-- EPRA net assets per share: up 9.6% to 2,282 pence (31 December 2015: 2,083 pence)
-- Net assets per share: up 7.8% to 1,952 pence (31 December 2015: 1,810 pence)
-- EPRA earnings per share: up 92% to 80.5 pence (2015: 41.9 pence)
-- Profit after tax: down to GBP29.7 million (2015: GBP68.6
million) due to higher property valuation increases in the prior
year (2015: GBP53.9 million vs. 2016: GBP2.4 million)
-- Investment property valuation: up 5.0%, or 0.4% in local currencies
-- Increase in distributions to shareholders of 10% (based on
one-third of distributions for 2015) with a proposed GBP7.2 million
tender buy-back of 1 in 95 at 1,650p per share
OPERATIONAL HIGHLIGHTS
Investment Property Portfolio:
-- Two properties acquired for GBP6.4 million at a net initial yield (NIY) of 6.0%
-- Since 1 July, one property acquired for GBP4.9 million (NIY:
6.8%), and contracts exchanged on a further acquisition for GBP36.4
million (NIY: 7.1%), both in Germany
-- Two properties sold for GBP60.9 million at an average net initial yield of 6.4%
-- Contracts exchanged on two further sales for GBP18.8 million (NIY: 3.4%)
-- 284,000 sq ft (26,400 sqm) of lease transactions in the
period, more than double that of last year
-- Vacancy rate remains low at 3.7% (31 December 2015: 3.1%)
Developments:
-- Obtained enhanced planning consent on Vauxhall Square,
replacing a hotel with 108,586 sq ft of Grade A offices
-- Began construction at Spring Mews phase 2, on an GBP8.6
million, 9,181 sq ft office and student accommodation
Financing:
-- Weighted average cost of debt lowered a further 13 bps to 3.27% (31 December 2015: 3.40%)
-- Interest cover remains high at 3.6 times (2015: 3.1 times)
-- Refinanced GBP68.3 million of loans at an average all-in rate
of 1.84% and, since 1 July, refinanced a further GBP23.6 million at
an average 1.78%
-- Repositioned the loan portfolio to 59% at fixed rates (31 December 2015: 51%)
-- GBP47 million of corporate bond investments sold prior to UK referendum on EU membership
-- Over GBP130 million of liquid resources at 30 June 2016
Governance:
-- On 8 March, Henry Klotz appointed Executive Chairman, Anna
Seeley appointed Non-Executive Vice Chairman, and Sten Mortstedt
remained as Executive Director
-- Nominations Committee established
Henry Klotz, Executive Chairman of CLS, commented:
"This has been a strong six months for the Group, with robust
earnings and NAV growth demonstrating the advantages of having a
geographically diversified business, in-house management and
low-cost debt finance. With 37% of the Group's business conducted
in Germany and France, and with 52% of our UK income derived from
central government departments, we are well positioned to address
any challenges, including those which the "Brexit" process may
present."
-ends-
For further information, please contact:
CLS Holdings plc
www.clsholdings.com
Henry Klotz, Executive Chairman
Sten Mortstedt, Executive Director
Fredrik Widlund, Chief Executive Officer
John Whiteley, Chief Financial Officer +44 (0)20 7582 7766
Liberum Capital Limited
Richard Crawley +44 (0)20 3100 2222
Panmure Gordon (UK) Limited
Dominic Morley
Andrew Potts +44 (0)20 7886 2500
Elm Square Advisers Limited
Jonathan Gray +44 (0)20 7823 3695
Smithfield Consultants (Financial PR)
Alex Simmons +44 (0)20 7360 4900
CHAIRMAN'S STATEMENT
OVERVIEW
The results for the first half of 2016 were characterised by
strong earnings and an increased EPRA NAV. This has further
demonstrated the advantages of the Group having a geographically
diversified investment property portfolio, in-house management and
low-cost debt finance. We have made opportunistic acquisitions at
attractive yields, sold peripheral properties, selectively
refinanced debt at historically low rates, and gained an amendment
enhancing the planning consent at Vauxhall Square.
Over the six months, EPRA NAV increased by 9.6% to 2,282 pence
per share (31 December 2015: 2,083 pence) as a result largely of
strong operational earnings and the strength of the euro against
sterling at the period end. We have achieved some notable progress
since the beginning of the year, including 284,000 sq ft (26,400
sqm) of lettings, acquisitions in Leatherhead, disposals in Sweden
and Luxembourg, and the refinancing of some GBP68 million of bank
loans.
The key elements of our business strategy remain strong. The
business is geographically well-diversified, with 63% of its
properties in the UK, 20% in Germany and 17% in France. The
investment property portfolio contains a broad base of 545
occupiers across the three markets generating rental income well in
excess of the Group's cost of debt. Approximately 37% of rents are
paid by governments and 24% by major corporations, and around half
of rents are subject to indexation. In the UK, 52% of the rent roll
is derived from central government departments. The balance sheet
is strong, with significant levels of cash and liquid resources,
and the Group is funded by a broad spread of 25 banks across
Europe, and by other capital market sources.
RESULTS AND FINANCING
Profit after tax for the six months to 30 June 2016 was GBP29.7
million (2015: GBP68.6 million), and generated earnings per share
of 71.0 pence (2015: 160.5 pence), reflecting a lower uplift in
property values in 2016. Excluding revaluation gains, EPRA earnings
per share were 80.5 pence (2015: 41.9 pence), an increase over last
year of 38.6 pence, of which 12.6 pence was from higher net rental
income and 19.4 pence related to favourable foreign exchange
variances on translating net monetary assets.
Shareholders' funds rose by 5.3% to GBP803.3 million, net of
distributions to shareholders and share buy-backs of GBP17.5
million in aggregate.
Interest cover increased to a comfortable 3.6 times (2015: 3.1
times), reflecting the Group's cash generation. We have refinanced
four loans with a total principal amount of GBP68.3 million at an
average rate of 1.96%. Since 1 July, we have refinanced a further
four loans for GBP23.6 million and at a rate of 1.78%. These
refinancings, the strength of the euro and the fall in 3 month
Euribor, together reduced the weighted average cost of debt to
3.27% (31 December 2015: 3.40%), which remains one of the lowest in
the real estate sector of the London Stock Exchange. At 30 June
2016, net debt as a proportion of gross assets (less liquid
resources) was 40.1% (31 December 2015: 39.8%).
Net debt increased to GBP672.2 million (31 December 2015:
GBP625.7 million), mainly reflecting a GBP40.0 million increase
from foreign exchange movements. Our liquid resources, comprising
GBP130.7 million of cash and corporate bonds, demonstrated the
strength of the balance sheet and our capacity to invest in the
future. In May, we sold GBP47 million of corporate bonds as a
precautionary measure ahead of the UK's EU referendum.
PROPERTY PORTFOLIO
The value of the property portfolio grew to GBP1.5 billion in
the six months, principally through GBP17.9 million of acquisitions
and capital expenditure, a 0.4% revaluation uplift, and positive
foreign exchange movements of GBP64.2 million. In January we
completed the acquisitions of Cassini Court and Pascal Place in
Leatherhead for GBP6.4 million. We have continued to see good
investment opportunities in Germany. Since the beginning of July,
we have exchanged contracts to acquire two attractive properties in
Germany for EUR49.5 million in aggregate. The first at
Parsevalstrasse 11, Düsseldorf comprises 239,496 sq ft (22,701 sqm)
of mixed-use space generating a net initial yield of 7.1%. The
second is at Harburger Ring 35 in Hamburg and is a 36,028 sq ft
(3,415 sqm) office building yielding an initial 6.4%. It is also
adjacent, and complementary, to an existing property of the Group.
The acquisition of Harburger Ring 35 duly completed in August.
In March, we disposed of our only property investment in
Luxembourg for EUR10.2 million, and in May we sold our last
investment property in Sweden, Vänerparken, for SEK590 million. We
also exchanged contracts to sell Atholl House, Aberdeen for GBP11.0
million, with completion scheduled for later this year, and in July
we exchanged on the sale of our only property in the south of
France, Le Chorus in Antibes, for EUR9.4 million. All disposals
were achieved above their respective values at 31 December
2015.
The value of the investment property portfolio rose by 5.0%,
benefiting from an 11.7% strengthening of the euro against sterling
following the result of the EU referendum. In local currencies, the
portfolio's underlying value rose by 0.4% in the six months. The
French portfolio rose by 1.8% in local currency and the German
portfolio by 1.4%. Notwithstanding the increase in stamp duty land
tax, the London portfolio was broadly unchanged and the Rest of the
UK fell by 2.3%. This reflects the expiration or break clauses in a
number of leases in March 2018. We expect the majority of these
properties to be relet to the existing tenants. At 30 June 2016,
the net initial yield of the portfolio of 5.7% (31 December 2015:
5.9%) was 243 bps above the Group's cost of debt, underpinning the
Group's ability to generate cash. Overall, the vacancy rate at 30
June 2016 was only 3.7% (31 December 2015: 3.1%), with most of the
293,478 sq ft (27,265 sqm) of space expiring or being made vacant
in the period having been relet. I am pleased to report that since
the UK's decision to leave the EU, we have seen no discernible
evidence of any change in the intentions of our tenants.
At Vauxhall Square, SW8, in February, we gained an amendment to
the overall planning consent, replacing a four-star hotel with
108,586 sq ft (10,088 sqm) of Grade A offices, increasing the
office element of the entire scheme to 255,000 sq ft (23,700 sqm).
In early 2016, Urbanest began groundworks to build the 454 room
student building, implementing the planning consent for the whole
Vauxhall Square site. Plans are well advanced to refurbish 95
Wandsworth Road when the existing tenant vacates at the end of this
year, with a target of generating some GBP2 million of rent when
relet, and at Wendle Court demolition is soon to begin in advance
of the construction of a hostel in 2017, on the relocation of which
the north east corner of the main Vauxhall Square site will be
fully vacated.
Following the successful phase 1 of Spring Mews, SE11 which
completed in 2014 and comprised a hotel, student accommodation and
offices, in July we began the development of phase 2, a GBP8.6
million, 7-storey development of 9,181 sq ft (853 sqm) of office
and student accommodation which is expected to reach practical
completion in late 2017.
DISTRIBUTIONS
In April, the Group made a distribution to shareholders of
GBP13.4 million by way of our traditional tender offer buy-back. We
propose to distribute a further GBP7.2 million by similar means in
September, offering 1 in 95 shares at 1,650 pence per share, on
which a Circular will be sent to shareholders in the next few days.
If approved, these two shareholder distributions will correspond to
an implied dividend yield of 3.2%, based on the average market
capitalisation during the first half of 2016.
In May, we acquired 255,099 shares in the market at 1,595 pence
per share, and these were added to our treasury shares.
BOARD CHANGES
On 8 March, I was appointed Executive Chairman, taking over from
our founder, Sten Mortstedt, who remains on the Board as an
Executive Director, and Anna Seeley was appointed Non-Executive
Vice Chairman.
OUTLOOK
The UK's vote to leave the EU has further illustrated the
advantage of the Group's property portfolio being geographically
diversified. 37% of the Group's business is conducted in Germany
and France, and with 52% of our UK income derived from central
government departments, I am confident that CLS is well positioned
to address any issues which the Brexit process may present.
Specifically, in these results we have benefited from the weakness
of sterling in the short term following the referendum, but have
yet to see any resulting correction in UK property values which may
follow in the second half of the year. So far, we have not seen any
change in the behaviour of our tenants and we are cautiously
optimistic that any negative effect may be relatively limited.
With high occupancy levels and a low cost of debt, the Group
remains a strong generator of cash. Our geographical diversity,
solid balance sheet and high level of liquid resources, together
with our flexible and opportunistic business approach, will enable
us to benefit from any challenges and opportunities which lay
ahead.
Henry Klotz
Executive Chairman
17 August 2016
BUSINESS REVIEW
INVESTMENT PROPERTY
LONDON
(56% of the Group's portfolio) The result of the referendum of
23 June 2016 in favour of the United Kingdom leaving the European
Union has created an element of uncertainty for commercial
property. On the one hand, sterling has devalued, the Bank of
England has cut the base rate to 0.25%, and fixed income yields and
medium-term interest swap rates have fallen, all of which have made
well-let commercial properties more attractive, both to domestic
and to international investors. On the other, concerns have been
raised over the projected fall to a lower level of GDP growth in
the UK, which may adversely affect tenant demand in the London
commercial property market.
The valuation of the London portfolio excluding Vauxhall Square
was marginally down by 0.2%, reflecting an increase in rental
values, offset by an increase in stamp duty land tax and in
vacancies, and the valuation of Vauxhall Square rose by 1.2%, with
the positive impact of an enhanced planning consent exceeding the
effect of the more conservative assumptions applied to the overall
scheme.
We have continued actively to seek new investments and in
January we acquired Cassini Court and Pascal Place, Randalls
Research Park, Leatherhead for GBP6.4 million, after costs. These
adjacent buildings comprised 28,122 sq ft (2,613 sqm) of offices
and, providing a net initial yield of 6.0% and around 10,580 sq ft
of vacant space, presented the opportunity to undertake a
modernisation programme.
On average, new lettings and rent reviews were achieved at 5.9%
above ervs of 31 December 2015, with notable successes at
Westminster Tower, SE11 and Great West House, Brentford. In the six
months to 30 June 2016, ervs across the London portfolio rose by
7.5%. The vacancy rate in London rose in the six months to 4.6% (31
December 2015: 3.6%) due to the vacancies acquired in Leatherhead,
and to leases expiring of 61,570 sq ft (5,720 sqm) exceeding
lettings of 48,933 sq ft (4,546 sqm). In particular, 15,823 sq ft
(1,470 sqm) was taken back from Sky UK at Great West House, which
gave us the opportunity to refurbish three floors. Occupational
demand within the London investment portfolio has been strong, and
excluding the Sky UK space, we let more space than the amount which
expired. Notwithstanding the likely slowdown in the UK economy in
the short to medium-term, interest rates are likely to remain low
for some time, and with a continued lack of supply of commercial
space in London, the leasing market remains attractive.
At Vauxhall Square, SW8, in February we gained an amendment to
the overall planning consent, replacing a four-star hotel with
108,586 sq ft (10,088 sqm) of Grade A offices, increasing the
office element of the entire scheme to 255,000 sq ft (23,700 sqm).
In early 2016, Urbanest began groundworks to build the 454 room
student building, implementing the planning consent for the whole
Vauxhall Square site. Plans are well advanced to refurbish 95
Wandsworth Road when the tenant vacates at the end of this year,
with a target of generating some GBP2 million of rent when relet,
and at Wendle Court demolition is soon to begin in advance of the
construction of a hostel in 2017, on the relocation of which the
north east corner of the main Vauxhall Square site will be fully
vacated.
The value of Vauxhall Square rose to GBP88.0 million at 30 June
2016 (31 December 2015: GBP83.3 million). The valuers, Knight
Frank, again used a residual development appraisal but, in
reflecting market conditions, applied more conservative assumptions
to the residential element and reflected the increase in stamp duty
land tax, which together would have reduced the scheme's value by
over GBP20 million, but for the amendment to the planning consent
which more than compensated for it. We estimate the existing use
value of the site would exceed GBP70 million, which underpins the
development valuation.
In July, we began the development of phase 2 of Spring Mews,
SE11, an GBP8.6 million, 7-storey development of 9,181 sq ft (853
sqm) of office and student accommodation which is expected to reach
practical completion in late 2017. Phase 1 of Spring Mews reached
practical completion in 2014, and comprised 378 student rooms which
have been fully let since completion, a 93 bedroom hotel which has
recorded over 85% occupancy since opening, and 11,952 sq ft (1,110
sqm) of fully let offices.
REST OF UK
(7% of the Group's portfolio) In the first half of the year we
exchanged contracts to sell Atholl House, Aberdeen, with completion
due before the end of the year, and it is held on the balance sheet
in current assets as a property held for sale. To date we have
received GBP1.5 million of non-refundable deposits from the
purchaser. We gained vacant possession of the building at the end
of June, which was a condition of the sale.
Of the GBP11.3 million rent roll of the Rest of UK portfolio,
GBP5.8 million is subject to expiry or break in March 2018. As
these events approach, the buildings will fall in value, but we
remain confident that most tenants will renew. In addition, the
values at 30 June 2016 were affected for the first time by the
increase in stamp duty land tax. Consequently, the value of the
portfolio, excluding Atholl House, fell in the six months by 2.3%
to GBP89.6 million (31 December 2015: GBP91.7 million).
GERMANY
(20% of the Group's portfolio) The vacancy rate in our German
portfolio has fallen to 2.1% (31 December 2015: 2.5%), with strong
occupational demand being captured in significant lettings at
Bismarckallee (Freiburg), Adlershofer Tor (Berlin) and Schellerdamm
(Hamburg). In the six months to 30 June 2016, 100,879 sq ft (9,372
sqm) of space was let or renewed and only 94,238 sq ft (8,755 sqm)
made vacant. Rents were achieved on new lettings and lease
extensions at 4.7% above ervs at 31 December 2015.
The value of the German portfolio increased by GBP38.6 million
or 14.8% in sterling; in local currency it rose by 1.4%, driven by
the fall in the vacancy rate and a small tightening of yields; ervs
in Germany rose by 0.2% in the six months.
We continue to see good value in selective opportunities in
Germany and historically low debt costs. We made no purchases in
the first half of the year, but in July we exchanged on two
acquisitions. Parsevalstrasse 11, Düsseldorf comprises 239,496 sq
ft (22,701 sqm) of mixed-use space generating a net initial yield
of 7.1%; and Harburger Ring 35 in Hamburg is a 36,028 sq ft (3,415
sqm) office building yielding an initial 6.4%, and is adjacent, and
complementary, to an existing holding of the Group. Together these
will be acquired for EUR49.5 million and will add net rental income
of EUR3.5 million per annum. The acquisition of Harburger Ring 35
duly completed in August.
The German market continues to be characterised by the low cost
of debt. We refinanced a EUR3.8 million loan at Rudesheimer Strasse
(Munich) for five years at a fixed rate of 0.8%, and in June a
EUR27.0 million loan secured against Adlershofer Tor (Berlin) fixed
for seven years at 1.1%.
FRANCE
(17% of the Group's portfolio) At Park Avenue (Lyon) a single
tenant left 42,076 sq ft (3,909 sqm) and we relet the space in its
entirety to one tenant within a matter of weeks. In total, 130,006
sq ft (12,078 sqm) expired in the six months to June, and 116,142
sq ft (10,790 sqm) was leased, increasing the vacancy rate to 5.0%
(31 December 2015: 3.9%). Rents were secured on new lettings and
lease extensions at 0.3% below ervs at 31 December 2015.
The value of the French portfolio increased by GBP33.2 million
or 15.3% in sterling; in local currency it rose by 1.8%, driven by
a small tightening of yields; ervs in France were unchanged in the
six months.
Since the beginning of the year, we have begun to take advantage
of opportunities to trim the French portfolio of its outlying
investments. In March, we sold our only property in Luxembourg, 16
Rue Eugène Ruppert, for EUR10.2 million, and in July we exchanged
contracts to dispose of our only property in the south of France,
Le Chorus in Antibes, for EUR9.2 million.
SWEDEN
Following a number of lease renewals in 2015, in May we
completed the sale of Vänerparken, our sole remaining investment
property in Sweden for SEK590 million. By selling the subsidiaries
which held the asset we created a gain on disposal of GBP9.3
million, including releasing GBP4.0 million of associated tax
liabilities. In April, when our SEK300 million retail bond issued
on Nasdaq Stockholm matured, we chose not to replace it.
OTHER INVESTMENTS
We maintain a portfolio of corporate bonds as a cash management
tool to produce a better return than holding cash. In May, to avoid
potential volatility in the financial markets over the EU
referendum, we sold GBP47 million of corporate bonds, and at the
end of June held bonds with a value of GBP39.7 million.
The Group received a dividend of GBP1.2 million in the period
from its 11.2% shareholding in Stockholm-listed Catena AB, a
property company which specialises in logistic warehouses. Catena's
share price rose by 7.0% in the six months to June and, after
foreign exchange gains, the market value of the Group's stake had
risen to GBP43.4 million (31 December 2015: GBP36.9 million).
First Camp, an owner and operator of Swedish vacation sites and
in which the Group owns a 58.0% interest, is a seasonal business
which is at its most active in the third quarter. Consequently, it
made a small loss in the first half of 2016; strategic initiatives
at the company are making encouraging progress and we expect a
positive contribution in the second half.
RESULTS FOR THE PERIOD
HEADLINES
Profit after tax attributable to the owners of the Company of
GBP29.7 million (2015: GBP68.6 million) generated basic earnings
per share of 71.0 pence (2015: 160.5 pence), and EPRA earnings per
share of 80.5 pence (2015: 41.9 pence). Gross property assets at 30
June 2016 including those in property, plant and equipment and
those held for sale, rose to GBP1,499.8 million (31 December 2015:
GBP1,462.9 million), net assets per share increased by 7.8% to
1,952 pence (31 December 2015: 1,810 pence) and EPRA net assets per
share by 9.6% to 2,282 pence (31 December 2015: 2,083 pence).
STATEMENT OF COMPREHENSIVE INCOME
Rental income for the six months to 30 June 2016 of GBP44.4
million (2015: GBP42.4 million) was higher than last year by a net
GBP2.0 million, or 5.0%, because GBP3.6 million from acquisitions
and newly let developments, and GBP1.1 million generated by the
relative strength of the euro, more than compensated for the rent
lost from disposals and lease expiries.
Operating profit of GBP41.4 million (2015: GBP86.7 million)
included a net GBP4.4 million profit on sale of investment
properties, but the main difference was on the revaluation of
investment properties, which in 2016 was a modest GBP2.4 million
(2015: GBP53.9 million).
Interest income of GBP11.6 million (2015: GBP5.5 million)
included a foreign exchange gain of GBP6.9 million (2015: GBP1.7
million) on translating overseas monetary assets into sterling at
the end of June. Finance costs of GBP19.9 million (2015: GBP12.0
million) contained a GBP6.8 million adverse movement in the fair
value of interest rate swaps, which was GBP8.2 million worse than
the year before. Such fair value movements are excluded in
calculating EPRA earnings per share.
EPRA NET ASSETS PER SHARE
EPRA net assets per share rose from 2,083 pence to 2,282 pence
in the six months to 30 June 2016, an increase of 199 pence per
share, or 9.6%. 98 pence of the rise reflected the effect of
translating overseas net assets into sterling at the balance sheet
date, and the underlying profit of the business added 77 pence per
share. Share buy-backs, the revaluation of properties and the
revaluation of equities and bonds together added 24 pence per
share.
CASH FLOW, NET DEBT AND GEARING
Net cash flow from operating activities was GBP22.2 million
(2015: GBP24.7 million), GBP17.5 million of which was distributed
to shareholders through a tender buy-back and market purchases. Net
proceeds from the sale of corporate bonds raised GBP36.5 million
and GBP6.9 million was received from net property disposals.
GBP30.5 million was spent on capital expenditure, and a net GBP37.9
million of loans were repaid.
In the six months to 30 June 2016, gross borrowings increased by
GBP3.3 million to GBP802.9 million (31 December 2015: GBP799.6
million), with the repayment of GBP37.9 million loans offset by
foreign exchange movements. The Group's weighted average property
loan to value was 50.6% (31 December 2015: 50.0%) and balance sheet
loan to value (net debt to gross assets less cash) was 41.4% (2015:
42.5%).
SHARE CAPITAL
In March, 5,000 shares were issued to a director from Treasury
Shares in lieu of incentives forfeited by him to join the Company,
and in April, 739,396 shares were cancelled under the tender offer
buy-back at 1,810 pence per share. In May, 255,099 shares were
purchased in the market at a discount to net asset value and placed
in Treasury, and at 30 June 2016, there were 41,151,086 shares in
issue, and 3,138,202 Treasury Shares held by the Company.
SUSTAINABILITY
Across the Group, our carbon reduction programme is on target
for the year, with achievements gained mainly through energy
efficiency initiatives and refurbishment projects for our tenants
and common areas. We are also installing smart metering across the
portfolio both at asset level and in tenant demises. With these
meters we are able to determine the energy being used and to
monitor energy patterns centrally. This supports our efforts to
reduce our tenants' costs through procurement management, reduce
our energy usage and mitigate our impact on climate change.
In the six months to 30 June 2016, our CO2 emissions were down
8% on those of last year on our managed assets in the UK. We are
focused on improving this position still further in the second half
of the year to ensure we meet our tenants' comfort requirements in
the most energy efficient way.
The Group also seeks to achieve high sustainability
certifications on refurbishment and development projects. Currently
across the Group we have 2 SKA certifications on refurbishment
projects and 5 BREEAM certifications on refurbishment and
development projects.
PRINCIPAL RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance over the
remaining six months of the financial year and could cause the
results for the year to differ materially from expected or
historical results. The Directors considered that the principal
risks and uncertainties which affected the Group at the time of the
publication of the annual report for the year ended 31 December
2015 were those set out below. A detailed explanation of these
risks and uncertainties can be found on pages 28 and 29 of the 2015
Annual Report, which is available at www.clsholdings.com:
-- Underperformance of investment portfolio due to:
- Cyclical downturn in property market*
- Inappropriate buy/sell/hold decisions
- Changes in supply of space and/or occupier demand*
- Poor asset management
-- Corporate bond investments:
- Underperformance of portfolio*
- Insolvency of bond issuer
-- Failure to secure planning permission
-- Contractor solvency and availability
-- Downturn in investment or occupational markets
-- Increased construction costs
-- Increasing building regulation and obsolescence
-- Climate change
-- Increasing energy costs and regulation
-- Unavailability of financing at acceptable prices
-- Adverse interest rate movements*
-- Breach of borrowing covenants*
-- Foreign currency exposure*
-- Financial counterparty credit risk
-- Increases in tax rates or changes to the basis of taxation.
-- Break-up of the Euro
-- UK exit from the EU*
In the opinion of the Directors, those risks and uncertainties
denoted by an asterisk (*) have been altered by the referendum of
23 June 2016 which returned a result in favour of the United
Kingdom leaving the European Union. This result has created
economic uncertainty, particularly in the UK. The following
mitigating factors of the risks affected by the referendum result
supplement those set out in the 2015 Annual Report:
Risk Areas of impact Mitigation Change in
risk
-------------------- -------------------- ------------------------------- ----------
Cyclical downturn Cash flow Geographically-diversified Increased
in property market Profitability portfolio with 37% of
Net asset value the Group's properties
Banking covenants being outside the UK.
-------------------- -------------------- ------------------------------- ----------
Changes in supply Rental income 52% of London and rest Increased
of space and/or Cash flow of UK income is derived
occupier demand Vacancy rate from Government tenants.
Void running costs Minimal exposure to the
Property values type of tenant who may
Net asset value want to relocate from
the UK to elsewhere in
Europe.
-------------------- -------------------- ------------------------------- ----------
Underperformance Net asset value In advance of the referendum, Increased
of bond portfolio Liquid resources the Group sold GBP47
million of bonds.
-------------------- -------------------- ------------------------------- ----------
Adverse interest Cost of borrowing Banks in the UK have Increased
rate movements Cost of hedging raised their borrowing
margins by up to 50 bps,
but interest rate swaps
have fallen by a similar
amount due to the increased
likelihood of interest
rates in the UK remaining
lower for longer.
-------------------- -------------------- ------------------------------- ----------
Breach of borrowing Cost of borrowing Borrowing agreements Increased
covenants contain cure clauses
to rectify LTV breaches
through part repayment
of the loan or the depositing
of cash.
-------------------- -------------------- ------------------------------- ----------
Foreign currency Net asset value Property investments Decreased
exposure Profitability are partially funded
in matching currency.
The difference between
the value of the property
and the amount of financing
is genrally unhedged
and monitored on an ongoing
basis.
-------------------- -------------------- ------------------------------- ----------
GOING CONCERN
As stated in note 2 to the Condensed Group Financial Statements,
the Directors are satisfied that the Group has sufficient resources
to continue in operation for the foreseeable future, being a period
of not less than 12 months from the date of this Half-Yearly
Financial Report. Accordingly, they continue to adopt the going
concern basis in preparing the Condensed Group Financial
Statements.
Responsibility statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements, which has been
prepared in accordance with IAS 34 'Interim Financial Reporting',
gives a true and fair view of the assets, liabilities, financial
position and profit of the Group, as required by DTR 4.2.4R;
(b) the Chairman's Statement and Business Review include a fair
review of the information required by DTR 4.2.7R (indication of
important events during the first six months and description of
principal risks and uncertainties for the remaining six months of
the year); and
(c) the Chairman's Statement and Business Review include a fair
review of the information required by DTR 4.2.8R (disclosure of
related party transactions and changes therein).
On behalf of the Board
Henry Klotz Sten Mortstedt
Executive Chairman Executive Director
17 August 2016
INDEPENT REVIEW REPORT TO CLS HOLDINGS PLC
We have been engaged by the Company to review the condensed set
of financial statements in the Half-Yearly Financial Report for the
six months ended 30 June 2016 which comprises the Condensed Group
Income Statement, the Condensed Group Statement of Comprehensive
Income, the Condensed Group Balance Sheet, the Condensed Group
Statement of Changes in Equity, the Condensed Group Statement of
Cash Flows and related notes 1 to 15. We have read the other
information contained in the Half-Yearly Financial Report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The Half-Yearly Financial Report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the Half-Yearly Financial Report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this Half-Yearly Financial Report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the Half-Yearly
Financial Report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Half-Yearly Financial Report for the six months ended 30
June 2016 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
17 August 2016
CONDENSED GROUP income STATEMENT
for the six months ended 30 June 2016
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
Notes (unaudited) (unaudited) (audited)
------------------------------------ ------ ------------- ------------- -------------
Continuing operations
Group revenue 59.5 58.6 118.9
------------------------------------ ------ ------------- ------------- -------------
Net rental income 3 51.2 49.8 99.0
Administration expenses (10.0) (9.5) (19.5)
Other expenses (6.2) (7.5) (13.8)
------------------------------------ ------ ------------- ------------- -------------
Group revenue less costs 35.0 32.8 65.7
Net movements on revaluation
of investment properties 9 2.4 53.9 98.0
Profit on sale of investment
properties 4.4 - 4.3
(Loss)/gain on sale of corporate
bonds (0.4) - 0.7
------------------------------------ ------ ------------- ------------- -------------
Operating profit 41.4 86.7 168.7
Finance income 4 11.6 5.5 10.0
Finance costs 5 (19.9) (12.0) (27.5)
------------------------------------ ------ ------------- ------------- -------------
Profit before tax 33.1 80.2 151.2
Taxation 6 (3.6) (11.2) (19.1)
------------------------------------ ------ ------------- ------------- -------------
Profit for the period 29.5 69.0 132.1
------------------------------------ ------ ------------- ------------- -------------
Attributable to:
Owners of the Company 29.7 68.6 129.9
Non-controlling interests (0.2) 0.4 2.2
------------------------------------ ------ ------------- ------------- -------------
29.5 69.0 132.1
------------------------------------ ------ ------------- ------------- -------------
Earnings per share from continuing
operations (expressed in pence
per share)
Basic 7 71.0p 160.5p 305.7p
------------------------------------ ------ ------------- ------------- -------------
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2016
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
Notes (unaudited) (unaudited) (audited)
----------------------------------------------- ------ ------------- ------------- -------------
Profit for the period 29.5 69.0 132.1
----------------------------------------------- ------ ------------- ------------- -------------
Other comprehensive income
Items that will not be reclassified
to profit or loss
Foreign exchange differences 25.5 (18.7) (8.7)
----------------------------------------------- ------ ------------- ------------- -------------
Items that may be reclassified to
profit or loss
Fair value gains/(losses) on corporate
bonds and other financial investments 2.7 7.8 (0.2)
Fair value losses taken to net loss
on sale of corporate bonds
and other financial investments 1.4 - -
Revaluation of property, plant and
equipment 1.1 1.0 2.9
Deferred tax on net fair value (gains)/losses 6 (2.4) 0.6 0.5
----------------------------------------------- ------ ------------- ------------- -------------
Total items that may be reclassified
to profit or loss 2.8 9.4 3.2
----------------------------------------------- ------ ------------- ------------- -------------
Total comprehensive income for the
period 57.8 59.7 126.6
----------------------------------------------- ------ ------------- ------------- -------------
Attributable to:
Owners of the Company 57.9 60.5 126.0
Non-controlling interests (0.1) (0.8) 0.6
----------------------------------------------- ------ ------------- ------------- -------------
57.8 59.7 126.6
----------------------------------------------- ------ ------------- ------------- -------------
CONDENSED GROUP BALANCE SHEET
at 30 June 2016
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
Notes (unaudited) (unaudited) (audited)
-------------------------------------- ------ ------------- ------------- ------------
Non-current assets
Investment properties 9 1,445.9 1,326.0 1,366.8
Property, plant and equipment 10 104.7 63.6 78.9
Goodwill 1.1 1.1 1.1
Investments in associates 1.6 1.4 1.5
Other financial investments 11 91.1 97.4 121.0
Deferred tax 6 2.1 2.9 3.3
-------------------------------------- ------ ------------- ------------- ------------
1,646.5 1,492.4 1,572.6
-------------------------------------- ------ ------------- ------------- ------------
Current assets
Trade and other receivables 53.9 6.1 13.5
Properties held for sale 15.8 39.9 58.6
Derivative financial instruments - - 0.5
Cash and cash equivalents 91.0 100.4 100.7
-------------------------------------- ------ ------------- ------------- ------------
160.7 146.4 173.3
-------------------------------------- ------ ------------- ------------- ------------
Total assets 1,807.2 1,638.8 1,745.9
-------------------------------------- ------ ------------- ------------- ------------
Current liabilities
Trade and other payables (51.6) (60.6) (54.2)
Current tax 6 (7.9) (6.5) (7.7)
Borrowings 12 (146.6) (237.0) (220.3)
Derivative financial instruments (2.3) (0.3) -
-------------------------------------- ------ ------------- ------------- ------------
(208.4) (304.4) (282.2)
-------------------------------------- ------ ------------- ------------- ------------
Non-current liabilities
Deferred tax 6 (125.7) (106.4) (114.7)
Borrowings 12 (652.1) (516.1) (575.2)
Derivative financial instruments (12.6) (4.9) (5.8)
-------------------------------------- ------ ------------- ------------- ------------
(790.4) (627.4) (695.7)
-------------------------------------- ------ ------------- ------------- ------------
Total liabilities (998.8) (931.8) (977.9)
-------------------------------------- ------ ------------- ------------- ------------
Net assets 808.4 707.0 768.0
-------------------------------------- ------ ------------- ------------- ------------
Equity
Share capital 13 11.1 11.3 11.3
Share premium 83.1 83.1 83.0
Other reserves 113.5 80.9 85.1
Retained earnings 595.6 527.9 583.4
-------------------------------------- ------ ------------- ------------- ------------
Equity attributable to owners of the
Company 803.3 703.2 762.8
Non-controlling interests 5.1 3.8 5.2
-------------------------------------- ------ ------------- ------------- ------------
Total equity 808.4 707.0 768.0
-------------------------------------- ------ ------------- ------------- ------------
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2016
Non-
Share Share Other Retained controlling Total
capital premium reserves earnings Total interest equity
Unaudited GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ --------- --------- ---------- ---------- ------- ------------- --------
Arising in the six
months ended 30 June
2016:
Total comprehensive
income for the period - - 28.2 29.7 57.9 (0.1) 57.8
Issue of share capital - 0.1 - - 0.1 - 0.1
Purchase of own
shares (0.2) - 0.2 (17.4) (17.4) - (17.4)
Expenses thereof - - - (0.1) (0.1) - (0.1)
------------------------ --------- --------- ---------- ---------- ------- ------------- --------
Total changes arising
in the period (0.2) 0.1 28.4 12.2 40.5 (0.1) 40.4
At 1 January 2016 11.3 83.0 85.1 583.4 762.8 5.2 768.0
------------------------ --------- --------- ---------- ---------- ------- ------------- --------
At 30 June 2016 11.1 83.1 113.5 595.6 803.3 5.1 808.4
------------------------ --------- --------- ---------- ---------- ------- ------------- --------
Non-
Share Share Other Retained controlling Total
capital premium reserves earnings Total interest equity
Unaudited GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ --------- --------- ---------- ---------- ------- ------------- --------
Arising in the six
months ended 30 June
2015:
Total comprehensive
income for the period - - (8.1) 68.6 60.5 (0.8) 59.7
Issue of share capital - 0.2 - - 0.2 - 0.2
Purchase of own
shares (0.2) - 0.2 (10.4) (10.4) - (10.4)
------------------------ --------- --------- ---------- ---------- ------- ------------- --------
Total changes arising
in the period (0.2) 0.2 (7.9) 58.2 50.3 (0.8) 49.5
At 1 January 2015 11.5 82.9 88.8 469.7 652.9 4.6 657.5
------------------------ --------- --------- ---------- ---------- ------- ------------- --------
At 30 June 2015 11.3 83.1 80.9 527.9 703.2 3.8 707.0
------------------------ --------- --------- ---------- ---------- ------- ------------- --------
Non-
Share Share Other Retained controlling Total
capital premium reserves earnings Total interest equity
Audited GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ --------- --------- ---------- ---------- ------- ------------- --------
Arising in the year
ended 31 December
2015:
Total comprehensive
income for the year - - (3.9) 129.9 126.0 0.6 126.6
Issue of share capital - 0.1 - - 0.1 - 0.1
Purchase of own
shares (0.2) - 0.2 (16.1) (16.1) - (16.1)
Expenses thereof - - - (0.1) (0.1) - (0.1)
------------------------ --------- --------- ---------- ---------- ------- ------------- --------
Total changes arising
in 2015 (0.2) 0.1 (3.7) 113.7 109.9 0.6 110.5
At 1 January 2015 11.5 82.9 88.8 469.7 652.9 4.6 657.5
------------------------ --------- --------- ---------- ---------- ------- ------------- --------
At 31 December 2015 11.3 83.0 85.1 583.4 762.8 5.2 768.0
------------------------ --------- --------- ---------- ---------- ------- ------------- --------
CONDENSED GROUP STATEMENT OF CASH FLOWS
for the six months ended 30 June 2016
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
Notes (unaudited) (unaudited) (audited)
---------------------------------------------- ------ ------------- ------------- -------------
Cash flows from operating activities
Cash generated from operations 14 32.1 37.5 72.1
Interest received 3.6 3.1 6.9
Interest paid (11.0) (11.6) (22.9)
Income tax paid (2.5) (4.3) (7.2)
---------------------------------------------- ------ ------------- ------------- -------------
Net cash inflow from operating activities 22.2 24.7 48.9
---------------------------------------------- ------ ------------- ------------- -------------
Cash flows from investing activities
Purchase of investment properties (6.4) (49.4) (81.4)
Capital expenditure on investment
properties (11.2) (3.4) (16.6)
Proceeds from sale of investment properties 13.3 - 34.8
Purchases of property, plant and equipment (19.3) (4.1) (9.3)
Purchase of corporate bonds (10.2) (12.1) (40.9)
Proceeds from sale of corporate bonds 46.7 21.0 28.5
Purchase of equity investments (1.1) - (6.2)
Dividends received from equity investments 1.3 1.0 1.0
Proceeds from sale of equity investments 4.4 - 0.5
Costs of foreign currency transactions - (1.8) (0.1)
Net cash outflow from business acquisition - (0.7) -
---------------------------------------------- ------ ------------- ------------- -------------
Net cash inflow/(outflow) from investing
activities 17.5 (49.5) (89.7)
---------------------------------------------- ------ ------------- ------------- -------------
Cash flows from financing activities
Purchase of own shares (17.5) (10.4) (16.2)
New loans 87.6 141.4 301.6
Issue costs of new loans (0.5) (1.3) (2.8)
Repayment of loans (125.5) (103.1) (236.2)
---------------------------------------------- ------ ------------- ------------- -------------
Net cash (outflow)/inflow from financing
activities (55.9) 26.6 46.4
---------------------------------------------- ------ ------------- ------------- -------------
Cash flow element of net (decrease)/increase
in cash and cash equivalents (16.2) 1.8 5.6
Foreign exchange loss 6.5 (1.6) (5.1)
---------------------------------------------- ------ ------------- ------------- -------------
Net (decrease)/increase in cash and
cash equivalents (9.7) 0.2 0.5
Cash and cash equivalents at the beginning
of the period 100.7 100.2 100.2
---------------------------------------------- ------ ------------- ------------- -------------
Cash and cash equivalents at the end
of the period 91.0 100.4 100.7
---------------------------------------------- ------ ------------- ------------- -------------
NOTES TO THE CONDENSED GROUP FINANCIAL STATEMENTS
30 June 2016
1 BASIS OF PREPARATION
The financial information contained in this Half-Yearly
Financial Report does not constitute statutory accounts as defined
in section 434 of the Companies Act 2006. The results disclosed for
the year ended 31 December 2015 are an abridged version of the full
accounts for that year, which received an unqualified report from
the auditor, did not contain a statement under section 498(2) or
(3) of the Companies Act 2006 or include a reference to any matter
to which the auditor drew attention by way of emphasis without
qualifying the auditor's report, and have been filed with the
Registrar of Companies. The annual financial statements of CLS
Holdings plc are prepared in accordance with IFRSs as adopted by
the European Union. The condensed financial statements included in
this Half-Yearly Financial Report have been prepared in accordance
with IAS 34 Interim Financial Reporting, as adopted by the European
Union. The same accounting policies, presentation and methods of
computation are followed in the condensed set of financial
statements as applied in the latest audited annual financial
statements.
2 GOING CONCERN
The Directors regularly stress-test the business model to ensure
that the Group has adequate working capital. They have reviewed the
current and projected financial position of the Group, taking into
account the repayment profile of the Group's loan portfolio, and
making reasonable assumptions about future trading performance. In
particular, the Directors are confident that loans expiring within
the next 12 months will be refinanced, and note that no further
loans expire in the United Kingdom between 2016 and 2018, and,
therefore, they have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future and, therefore, they continue to adopt the going
concern basis in preparing the Half-Yearly Financial Report.
3 SEGMENT INFORMATION
The Group has two operating divisions - Investment Property and
Other Investments. Other Investments comprise Spring Mews hotel,
corporate bonds, shares in Catena AB and First Camp Sverige Holding
AB, and other small corporate investments. The Group manages the
Investment Property division on a geographical basis due to its
size and geographical diversity. Consequently, the Group's
principal operating segments are:
Investment Property London
-
Rest of United Kingdom
France
Germany
Sweden
Other Investments
All transactions between the operating segments have been
eliminated on consolidation.
The Group's results for the six months ended 30 June 2016 by
operating segment were as follows:
Investment Property
------------------------ --------------------------------------------
Rest Other
London of UK France Germany Sweden Investments Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ ------- ------- ------- -------- ------- ------------- -------
Rental income 20.8 5.9 7.2 9.3 1.2 - 44.4
Other property-related
income 0.3 0.1 0.8 - - 6.7 7.9
Service charge
income 2.6 - 2.5 2.0 0.1 - 7.2
Service charges
and similar expenses (2.8) - (2.8) (2.2) (0.5) - (8.3)
------------------------ ------- ------- ------- -------- ------- ------------- -------
Net rental income 20.9 6.0 7.7 9.1 0.8 6.7 51.2
Administration
expenses (1.7) (0.1) (0.7) (0.6) (0.1) (3.7) (6.9)
Other expenses (1.8) (0.1) (0.4) (0.6) - (3.3) (6.2)
------------------------ ------- ------- ------- -------- ------- ------------- -------
Group revenue
less costs 17.4 5.8 6.6 7.9 0.7 (0.3) 38.1
Net movements
on revaluation
of investment
properties (2.4) (3.2) 4.1 3.9 - - 2.4
(Loss)/profit
on sale of investment
properties - - (0.9) - 5.3 - 4.4
(Loss)/gain on
sale of corporate
bonds - - - - - (0.4) (0.4)
------------------------ ------- ------- ------- -------- ------- ------------- -------
Segment operating
profit 15.0 2.6 9.8 11.8 6.0 (0.7) 44.5
Finance income - - - - 0.4 11.2 11.6
Finance costs (13.6) (1.5) (1.1) (1.8) (0.2) (1.7) (19.9)
------------------------ ------- ------- ------- -------- ------- ------------- -------
Segment profit
before tax 1.4 1.1 8.7 10.0 6.2 8.8 36.2
------------------------ ------- ------- ------- -------- ------- -------------
Central administration
expenses (3.1)
------------------------ ------- ------- ------- -------- ------- ------------- -------
Profit before
tax 33.1
------------------------ ------- ------- ------- -------- ------- ------------- -------
The Group's results for the six months ended 30 June 2015 by
operating segment were as follows:
Investment Property
--------------------------------------------
Rest Other
London of UK France Germany Sweden Investments Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ ------- ------- ------- -------- ------- ------------- -------
Rental income 18.4 6.7 6.9 7.7 2.7 - 42.4
Other property-related
income 0.5 - - - 0.4 7.8 8.7
Service charge
income 3.4 - 2.3 1.6 0.2 - 7.5
Service charges
and similar expenses (3.3) (0.1) (2.4) (1.7) (1.3) - (8.8)
------------------------ ------- ------- ------- -------- ------- ------------- -------
Net rental income 19.0 6.6 6.8 7.6 2.0 7.8 49.8
Administration
expenses (1.7) (0.1) (0.7) (0.6) (0.1) (2.4) (5.6)
Other expenses (1.5) (0.2) (0.4) (0.6) (0.1) (4.7) (7.5)
------------------------ ------- ------- ------- -------- ------- ------------- -------
Group revenue
less costs 15.8 6.3 5.7 6.4 1.8 0.7 36.7
Net movements
on revaluation
of investment
properties 33.5 9.1 5.5 3.5 2.3 - 53.9
------------------------ ------- ------- ------- -------- ------- ------------- -------
Segment operating
profit 49.3 15.4 11.2 9.9 4.1 0.7 90.6
Finance income - - - - - 5.5 5.5
Finance costs (5.4) (1.6) (1.2) (0.9) (0.2) (2.7) (12.0)
------------------------ ------- ------- ------- -------- ------- ------------- -------
Segment profit
before tax 43.9 13.8 10.0 9.0 3.9 3.5 84.1
------------------------ ------- ------- ------- -------- ------- -------------
Central administration
expenses (3.9)
------------------------ ------- ------- ------- -------- ------- ------------- -------
Profit before
tax 80.2
------------------------ ------- ------- ------- -------- ------- ------------- -------
The Group's results for the year ended 31 December 2015 were as
follows:
Investment Property
--------------------------------------------
Rest Other
London of UK France Germany Sweden Investments Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ ------- ------- ------- -------- ------- ------------- -------
Rental income 37.8 13.0 13.8 16.2 4.5 - 85.3
Other property-related
income 0.8 0.2 0.1 - 0.4 17.5 19.0
Service charge
income 6.5 - 4.5 3.3 0.3 - 14.6
Service charges
and similar expenses (9.7) - (4.7) (3.5) (2.0) - (19.9)
------------------------ ------- ------- ------- -------- ------- ------------- -------
Net rental income 35.4 13.2 13.7 16.0 3.2 17.5 99.0
Administration
expenses (4.2) (0.1) (1.4) (1.4) (0.4) (6.0) (13.5)
Other expenses (4.3) (0.4) (0.7) (1.1) - (7.3) (13.8)
------------------------ ------- ------- ------- -------- ------- ------------- -------
Group revenue
less costs 26.9 12.7 11.6 13.5 2.8 4.2 71.7
Net movements
on revaluation
of investment
properties 62.3 8.7 6.7 19.5 0.8 - 98.0
Profit/(loss)
on sale of investment
properties 3.2 1.5 - (0.4) - - 4.3
Gain on sale
of corporate
bonds - - - - - 0.7 0.7
------------------------ ------- ------- ------- -------- ------- ------------- -------
Segment operating
profit/(loss) 92.4 22.9 18.3 32.6 3.6 4.9 174.7
Finance income - - - - - 10.0 10.0
Finance costs (17.0) (3.2) (2.3) (2.5) (0.5) (2.0) (27.5)
------------------------ ------- ------- ------- -------- ------- ------------- -------
Segment profit/(loss)
before tax 75.4 19.7 16.0 30.1 3.1 12.9 157.2
------------------------ ------- ------- ------- -------- ------- -------------
Central administration
expenses (6.0)
------------------------ ------- ------- ------- -------- ------- ------------- -------
Profit before
tax 151.2
------------------------ ------- ------- ------- -------- ------- ------------- -------
Segment assets and liabilities
Assets Liabilities
-------------------------------- --------------------------------
30 June 30 June 31 December 30 June 30 June 31 December
2016 2015 2015 2016 2015 2015
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- -------- -------- ------------ -------- -------- ------------
Investment Property
London 831.8 775.3 824.2 462.0 419.7 458.5
Rest of UK 99.2 108.5 102.5 77.7 81.5 79.9
France 254.9 215.6 227.1 192.2 168.0 172.7
Germany 306.6 241.0 263.3 177.5 163.4 162.7
Sweden 49.0 47.5 50.3 3.9 33.6 35.0
Other investments 265.7 250.9 278.5 85.5 65.6 69.1
--------------------- -------- -------- ------------ -------- -------- ------------
1,807.2 1,638.8 1,745.9 998.8 931.8 977.9
--------------------- -------- -------- ------------ -------- -------- ------------
Segment capital expenditure
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
--------------------- ----------- ----------- -------------
Investment Property
London 15.5 25.7 53.7
Rest of UK - 0.3 0.3
France 1.7 0.8 2.2
Germany 0.8 18.7 19.1
Sweden - 0.1 0.6
Other investments 19.2 5.4 12.0
--------------------- ----------- ----------- -------------
37.2 51.0 87.9
--------------------- ----------- ----------- -------------
4 FINANCE INCOME
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
---------------------------- ----------- ----------- -------------
Interest income 3.4 2.8 7.2
Other finance income 1.3 1.0 1.0
Foreign exchange variances 6.9 1.7 1.8
---------------------------- ----------- ----------- -------------
11.6 5.5 10.0
---------------------------- ----------- ----------- -------------
5 FINANCE COSTS
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
------------------------------------------- ----------- ----------- -------------
Interest expense
Bank loans 7.2 6.5 13.3
Debenture loan 1.4 1.5 3.0
Zero-coupon note 0.5 0.6 1.1
Secured notes 1.5 1.6 3.1
Unsecured bonds 2.0 2.2 4.5
Amortisation of loan issue costs 0.8 1.2 2.0
------------------------------------------- ----------- ----------- -------------
Total interest costs 13.4 13.6 27.0
Less interest capitalised on development
projects (0.3) (0.2) (0.4)
------------------------------------------- ----------- ----------- -------------
13.1 13.4 26.6
Loss on partial redemption of zero coupon
note - - 1.2
Movement in fair value of derivative
financial instruments
Interest rate swaps: transactions not
qualifying as hedges 6.8 (1.4) (0.4)
Interest rate caps: transactions not
qualifying as hedges - - 0.1
------------------------------------------- ----------- ----------- -------------
19.9 12.0 27.5
------------------------------------------- ----------- ----------- -------------
6 TAXATION
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
-------------- ----------- ----------- -------------
Current tax 2.3 3.3 5.6
Deferred tax 1.3 7.9 13.5
-------------- ----------- ----------- -------------
3.6 11.2 19.1
-------------- ----------- ----------- -------------
The balance sheet movement in current and deferred tax since the
last reported balance sheet is as follows:
Current Deferred Deferred
tax tax tax Total net
liability asset liability liability
GBPm GBPm GBPm GBPm
------------------------------------------- ----------- --------- ----------- -----------
At 1 January 2016 (7.7) 3.3 (114.7) (119.1)
Charged in arriving at profit
after tax (2.9) (2.4) (3.7) (9.0)
Released on disposal of subsidiaries 0.6 - 4.8 5.4
(Charged)/credited to other comprehensive
income - 1.1 (3.5) (2.4)
Net tax paid 2.5 - - 2.5
Foreign exchange variances (0.4) 0.1 (8.6) (8.9)
------------------------------------------- ----------- --------- ----------- -----------
At 30 June 2016 (7.9) 2.1 (125.7) (131.5)
------------------------------------------- ----------- --------- ----------- -----------
7 EARNINGS PER SHARE
Management has chosen to disclose the European Public Real
Estate Association (EPRA) measure of earnings per share, which has
been provided to give relevant information to investors on the
long-term performance of the Group's underlying business. The EPRA
measure excludes items which are non-recurring in nature such as
profits (net of related tax) on sale of investment properties and
of other non-current investments, and items which have no impact to
earnings over their life, such as the change in fair value of
derivative financial instruments and the net movement on
revaluation of investment properties, and the related deferred
taxation on these items.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Earnings GBPm GBPm GBPm
---------------------------------------------- ----------- ----------- -------------
Profit for the period 29.7 68.6 129.9
Net movements on investment properties (2.4) (53.9) (98.0)
Change in fair value of derivative financial
instruments 9.7 (1.4) (0.3)
Other gains and losses - (2.9) (2.9)
Profit on sale of investment properties (4.4) - (4.3)
Loss/(gain) on sale of corporate bonds 0.4 - (0.7)
Tax relating to the above adjustments 0.7 7.5 12.3
---------------------------------------------- ----------- ----------- -------------
EPRA earnings 33.7 17.9 36.0
---------------------------------------------- ----------- ----------- -------------
Six months Six months Year
ended ended ended
30 June 30 June 31 December
Weighted average number of ordinary shares 2016 2015 2015
in circulation Number Number Number
-------------------------------------------- ----------- ----------- -------------
Weighted average number of ordinary shares
in circulation 41,839,504 42,732,275 42,494,950
-------------------------------------------- ----------- ----------- -------------
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Earnings per Share Pence Pence Pence
-------------------- ----------- ----------- -------------
Basic 71.0 160.5 305.7
EPRA 80.5 41.9 84.7
-------------------- ----------- ----------- -------------
8 NET ASSETS PER SHARE
Management has chosen to disclose the two European Public Real
Estate Association (EPRA) measures of net assets per share: EPRA
net assets per share; and EPRA triple net assets per share. The
EPRA net assets per share measure highlights the fair value of
equity on a long-term basis, and so excludes items which have no
impact on the Group in the long term, such as fair value movements
of derivative financial instruments and deferred tax on the fair
value of investment properties. The EPRA triple net assets per
share measure discloses net assets per share on a true fair value
basis: all balance sheet items are included at their fair value in
arriving at this measure, including deferred tax, fixed rate loan
liabilities and any other balance sheet items not reported at fair
value.
30 June 30 June 31 December
2016 2015 2015
Net Assets GBPm GBPm GBPm
------------------------------------------------ -------- -------- ------------
Basic net assets attributable to owners
of the Company 803.3 703.2 762.8
Adjustment to increase fixed rate debt
to fair value, net of tax (37.9) (33.3) (27.7)
Goodwill as a result of deferred tax (1.1) (1.1) (1.1)
------------------------------------------------ -------- -------- ------------
EPRA triple net assets 764.3 668.8 734.0
Deferred tax on property and other non-current
assets, net of minority interests 122.1 104.4 110.9
Fair value of derivative financial instruments 14.9 5.2 5.3
Adjustment to decrease fixed rate debt
to book value, net of tax 37.9 33.3 27.7
------------------------------------------------ -------- -------- ------------
EPRA net assets 939.2 811.7 877.9
------------------------------------------------ -------- -------- ------------
30 June 30 June 31 December
2016 2015 2015
Number of ordinary shares in circulation Number Number Number
------------------------------------------ ----------- ----------- ------------
Number of ordinary shares in circulation 41,151,086 42,402,323 42,140,581
------------------------------------------ ----------- ----------- ------------
30 June 30 June 31 December
2016 2015 2015
Net Assets per Share Pence Pence Pence
---------------------- -------- -------- ------------
Basic 1,952 1,658 1,810
EPRA 2,282 1,914 2,083
EPRA triple net 1,857 1,577 1,742
---------------------- -------- -------- ------------
9 INVESTMENT PROPERTIES
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
------------ -------- -------- ------------
London 814.7 741.3 800.1
Rest of UK 89.6 99.6 91.7
France 242.7 205.4 215.6
Germany 298.9 233.5 259.4
Sweden - 46.2 -
------------ -------- -------- ------------
1,445.9 1,326.0 1,366.8
------------ -------- -------- ------------
The movement in investment properties since the last reported
balance sheet was as follows:
Rest of
London UK France Germany Total
GBPm GBPm GBPm GBPm GBPm
------------------------------ ------- -------- ------- -------- --------
At 1 January 2016 800.1 91.7 215.6 259.4 1,366.8
Acquisitions 6.4 - - - 6.4
Capital expenditure 9.0 - 1.7 0.8 11.5
Disposals - - (0.1) - (0.1)
Transfer to held for
sale - - (7.7) - (7.7)
Net movements on revaluation
of investment properties (2.4) (2.1) 4.1 3.9 3.5
Rent-free period debtor
adjustments 1.6 - 0.1 0.1 1.8
Exchange rate variances - - 29.0 34.7 63.7
------------------------------ ------- -------- ------- -------- --------
At 30 June 2016 814.7 89.6 242.7 298.9 1,445.9
------------------------------ ------- -------- ------- -------- --------
The investment properties were revalued at 30 June 2016 to their
fair value. Valuations were based on current prices in an active
market for all properties. The property valuations were carried out
by external, professionally qualified valuers as follows:
London: Cushman and Wakefield; Knight Frank (30 June 2015: DTZ;
Knight Frank)
Rest of UK: Cushman and Wakefield (30 June 2015: DTZ)
France: Jones Lang LaSalle
Germany: Cushman and Wakefield (30 June 2015: Colliers
International)
Sweden: n/a (30 June 2015: CB Richard Ellis)
Investment properties include leasehold properties with a
carrying value of GBP41.0 million (30 June 2015: GBP51.2 million;
31 December 2015: GBP38.7 million).
Where the Group leases out its investment property under
operating leases the duration is typically three years or more. No
contingent rents have been recognised in the current or comparative
years.
Substantially all investment properties are provided as security
against debt.
In their valuation reports, the Group's external valuers have
stated that the probability of their opinions exactly coinciding
with the prices achieved, were there to be a sale, had reduced
since the result of the referendum on 23 June 2016 in favour of the
UK leaving the EU, because it had not been possible to gauge the
effect of this decision on property valuations at 30 June 2016 by
reference to transactions in the market, which is the primary
source used by the valuers.
The difference between the GBP3.5 million of net movements on
revaluation of investment properties shown above and the GBP2.4
million shown in the income statement is a fall of GBP1.1 million
in the value of a property classified in the balance sheet as a
property held for sale.
10 PROPERTY, PLANT AND EQUIPMENT
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
------------------------- -------- -------- ------------
Hotel 26.6 25.3 26.5
Land and buildings 70.0 30.4 44.0
Owner-occupied property 5.7 4.8 5.8
Fixtures and fittings 2.4 3.1 2.6
------------------------- -------- -------- ------------
Total 104.7 63.6 78.9
------------------------- -------- -------- ------------
The movement in property, plant and equipment since the last
reported balance sheet was as follows:
Owner- Fixtures
Land and occupied and
Hotel buildings property fittings Total
GBPm GBPm GBPm GBPm GBPm
-------------------------- ------ ----------- ---------- ---------- ------
At 1 January 2016 26.7 44.4 6.0 4.7 81.8
Additions - 19.2 - 0.1 19.3
Exchange rate variances - 5.9 - - 5.9
Revaluation 0.2 1.0 (0.1) - 1.1
-------------------------- ------ ----------- ---------- ---------- ------
At 30 June 2016 26.9 70.5 5.9 4.8 108.1
-------------------------- ------ ----------- ---------- ---------- ------
Comprising:
At cost - - - 4.8 4.8
At valuation 30 June
2016 26.9 70.5 5.9 - 103.3
-------------------------- ------ ----------- ---------- ---------- ------
26.9 70.5 5.9 4.8 108.1
-------------------------- ------ ----------- ---------- ---------- ------
Accumulated depreciation
and impairment
At 1 January 2016 (0.2) (0.4) (0.2) (2.1) (2.9)
Depreciation charge (0.1) (0.1) - (0.3) (0.5)
-------------------------- ------ ----------- ---------- ---------- ------
At 30 June 2016 (0.3) (0.5) (0.2) (2.4) (3.4)
-------------------------- ------ ----------- ---------- ---------- ------
Net book value
At 30 June 2016 26.6 70.0 5.7 2.4 104.7
-------------------------- ------ ----------- ---------- ---------- ------
At 31 December 2015 26.5 44.0 5.8 2.6 78.9
-------------------------- ------ ----------- ---------- ---------- ------
11 OTHER FINANCIAL INVESTMENTS
Destination 30 June 30 June 31 December
of 2016 2015 2015
Investment type Investment GBPm GBPm GBPm
------------------------ ---------------------- ------------- -------- -------- ------------
Available-for-sale
financial investments
carried at fair Listed corporate
value bonds UK 9.4 19.4 24.0
Eurozone 3.6 3.5 4.2
Other 26.7 30.9 45.2
-------- -------- ------------
39.7 53.8 73.4
Listed equity
securities UK - 0.2 0.3
Sweden 50.9 40.2 42.8
Unlisted investments Sweden 0.5 3.2 4.5
---------------------- -------------------------------------- -------- -------- ------------
91.1 97.4 121.0
------------------------------------------------------------- -------- -------- ------------
The movement of other financial investments since the last
reported balance sheet, based on the methods used to measure their
fair value, is given below:
Level 1 Level 2 Level 3
Quoted Observable Other
market market valuation
price data methods* Total
GBPm GBPm GBPm GBPm
--------------------------------------------- -------- ------------ ----------- -------
At 1 January 2016 43.1 73.4 4.5 121.0
Additions 1.1 10.2 - 11.3
Disposals (0.3) (47.1) (4.1) (51.5)
Fair value movements recognised
in reserves on available-for-sale
assets 2.2 0.5 - 2.7
Fair value movements recognised
in profit before tax on available-for-sale
assets - 1.4 - 1.4
Exchange rate variations 4.8 1.3 0.1 6.2
--------------------------------------------- -------- ------------ ----------- -------
At 30 June 2016 50.9 39.7 0.5 91.1
--------------------------------------------- -------- ------------ ----------- -------
* Unlisted equity shares valued using multiples from comparable
listed organisations.
Travel and Telecoms Energy and
Sector Banking Insurance Tourism and IT Resources Other Total
--------- ---------------- -------------- ---------- ----------- -------------- ------- --------
Value GBP13.7m GBP2.7m GBP3.2m GBP7.0m GBP12.3m GBP0.8m GBP39.7m
Running
yield 8.0% 7.1% 6.5% 6.8% 9.0% 6.4% 7.3%
--------- ---------------- -------------- ---------- ----------- -------------- ------- --------
Issuers Societe Generale Brit Insurance British Telecom Freeport - Stora
Airways Italia McMoRan Enso
Bank of Ireland Phoenix Stena CenturyLink Arcelor Mittal
Life
Deutsche Old Mutual SAS T-Mobile BHP Billiton
Bank
Credit Agricole Millicom Transocean
Allied Irish Dell Seadrill
Santander Enel
Unicredit
Barclays
Investec
Lloyds
HSBC
RBS
--------- ---------------- -------------- ---------- ----------- -------------- ------- --------
Corporate Bond Portfolio
At 30 June 2016
12 BORROWINGS
Maturity profile
Bank Debenture Zero coupon Unsecured Secured
loans loans note bonds notes Total
At 30 June 2016 GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- -------- ---------- ------------ ---------- -------- --------
Within one year or on
demand 141.8 1.9 - - 4.2 147.9
More than one but not
more than two years 88.9 2.1 - - 4.2 95.2
More than two but not
more than five years 276.4 8.0 - 65.0 12.5 361.9
More than five years 126.1 15.8 7.4 - 48.6 197.9
--------------------------- -------- ---------- ------------ ---------- -------- --------
633.2 27.8 7.4 65.0 69.5 802.9
Unamortised issue costs (3.1) - - (0.5) (0.6) (4.2)
--------------------------- -------- ---------- ------------ ---------- -------- --------
Borrowings 630.1 27.8 7.4 64.5 68.9 798.7
Less amount due for
settlement within 12
months (140.7) (1.9) - 0.1 (4.1) (146.6)
--------------------------- -------- ---------- ------------ ---------- -------- --------
Amount due for settlement
after 12 months 489.4 25.9 7.4 64.6 64.8 652.1
--------------------------- -------- ---------- ------------ ---------- -------- --------
Bank Debenture Zero coupon Unsecured Secured
loans loans note bonds notes Total
At 30 June 2015 GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- -------- ---------- ------------ ---------- -------- --------
Within one year or on
demand 209.3 1.7 - 23.0 4.2 238.2
More than one but not
more than two years 58.7 1.9 - - 4.2 64.8
More than two but not
more than five years 119.3 7.2 - 65.0 12.5 204.0
More than five years 168.0 17.4 11.8 - 52.8 250.0
--------------------------- -------- ---------- ------------ ---------- -------- --------
555.3 28.2 11.8 88.0 73.7 757.0
Unamortised issue costs (2.4) - - (0.8) (0.7) (3.9)
--------------------------- -------- ---------- ------------ ---------- -------- --------
Borrowings 552.9 28.2 11.8 87.2 73.0 753.1
Less amount due for
settlement within 12
months (208.5) (1.7) - (22.7) (4.1) (237.0)
--------------------------- -------- ---------- ------------ ---------- -------- --------
Amount due for settlement
after 12 months 344.4 26.5 11.8 64.5 68.9 516.1
--------------------------- -------- ---------- ------------ ---------- -------- --------
Bank Debenture Zero coupon Unsecured Secured
loans loans note bonds notes Total
At 31 December 2015 GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- -------- ---------- ------------ ---------- -------- --------
Within one year or on
demand 191.5 1.8 - 24.1 4.2 221.6
More than one but not
more than two years 57.1 2.0 - - 4.2 63.3
More than two but not
more than five years 186.2 7.6 - 65.0 12.5 271.3
More than five years 168.8 15.9 8.4 - 50.7 243.8
--------------------------- -------- ---------- ------------ ---------- -------- --------
603.6 27.3 8.4 89.1 71.6 800.0
Unamortised issue costs (3.3) - - (0.6) (0.6) (4.5)
--------------------------- -------- ---------- ------------ ---------- -------- --------
Borrowings 600.3 27.3 8.4 88.5 71.0 795.5
Less amount due for
settlement within 12
months (190.5) (1.8) - (23.9) (4.1) (220.3)
--------------------------- -------- ---------- ------------ ---------- -------- --------
Amount due for settlement
after 12 months 409.8 25.5 8.4 64.6 66.9 575.2
--------------------------- -------- ---------- ------------ ---------- -------- --------
Fair values
Carrying amounts Fair values
-------------------------------- --------------------------------
30 June 30 June 31 December 30 June 30 June 31 December
2016 2015 2015 2016 2015 2015
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ -------- -------- ------------ -------- -------- ------------
Current borrowings 146.6 237.0 220.3 146.7 237.0 220.4
Non-current borrowings 652.1 516.1 575.2 698.2 557.7 609.6
------------------------ -------- -------- ------------ -------- -------- ------------
798.7 753.1 795.5 844.9 794.7 830.0
------------------------ -------- -------- ------------ -------- -------- ------------
The fair value of borrowings represents the amount at which a
financial instrument could be exchanged in an arm's length
transaction between informed and willing parties, discounted at the
prevailing market rate, and excludes accrued interest.
13 SHARE CAPITAL
Number
--------------------------------------
Ordinary
Ordinary shares Total
shares Total in Treasury ordinary
in Treasury ordinary circulation shares shares
circulation shares shares GBPm GBPm GBPm
------------------------- ------------- ---------- ----------- ------------- --------- ----------
At 1 January 2016 42,140,581 2,888,103 45,028,684 10.6 0.7 11.3
Issued 5,000 (5,000) - - - -
Cancelled following
tender offer(1) (739,396) - (739,396) (0.3) - (0.3)
Purchase of own shares:
pursuant to market
purchase (255,099) 255,099 - - 0.1 0.1
------------------------- ------------- ---------- ----------- ------------- --------- ----------
At 30 June 2016 41,151,086 3,138,202 44,289,288 10.3 0.8 11.1
------------------------- ------------- ---------- ----------- ------------- --------- ----------
Number
--------------------------------------
Ordinary
Ordinary shares Total
shares Total in Treasury ordinary
in Treasury ordinary circulation shares shares
circulation shares shares GBPm GBPm GBPm
--------------------- ------------- ---------- ----------- ------------- --------- ----------
At 1 January 2015 42,924,061 2,903,103 45,827,164 10.8 0.7 11.5
Issued 15,000 (15,000) - - - -
Cancelled following
tender offer(2) (536,738) - (536,738) (0.2) - (0.2)
--------------------- ------------- ---------- ----------- ------------- --------- ----------
At 30 June 2015 42,402,323 2,888,103 45,290,426 10.6 0.7 11.3
--------------------- ------------- ---------- ----------- ------------- --------- ----------
Number
--------------------------------------
Ordinary
Ordinary shares Total
shares Total in Treasury ordinary
in Treasury ordinary circulation shares shares
circulation shares shares GBPm GBPm GBPm
---------------------- ------------- ---------- ----------- ------------- --------- ----------
At 1 January 2015 42,924,061 2,903,103 45,827,164 10.8 0.7 11.5
Issued 15,000 (15,000) - - - -
Cancelled following
tender offer(2 & 3) (798,480) - (798,480) (0.2) - (0.2)
---------------------- ------------- ---------- ----------- ------------- --------- ----------
At 31 December 2015 42,140,581 2,888,103 45,028,684 10.6 0.7 11.3
---------------------- ------------- ---------- ----------- ------------- --------- ----------
1. A tender offer by way of a Circular dated 18 March 2016 for
the purchase of 1 in 57 shares at 1,810 pence per share was
completed in April 2016. It returned GBP13.4 million to
shareholders, equivalent to 31.8 pence per share.
2. A tender offer by way of a Circular dated 13 March 2015 for
the purchase of 1 in 80 shares at 1,950 pence per share was
completed in April 2015. It returned GBP10.4 million to
shareholders, equivalent to 24.4 pence per share.
3. A tender offer by way of a Circular dated 21 August 2015 for
the purchase of 1 in 162 shares at 2,190 pence per share was
completed in September 2015. It returned GBP5.7 million to
shareholders, equivalent to 13.5 pence per share.
14 CASH GENERATED FROM OPERATIONS
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
-------------------------------------------- ----------- ----------- -------------
Operating profit 41.4 86.7 168.7
Adjustments for:
Net movements on revaluation of investment
properties (2.4) (53.9) (98.0)
Depreciation and amortisation 0.5 1.0 1.3
Non-cash rental income (1.8) (0.4) (1.3)
Share-based payment expense 0.1 0.2 0.2
Profit on sale of investment properties (4.4) - (4.3)
Gain on sale of corporate bonds 0.4 - (0.7)
Other gains and losses - - (2.9)
Changes in working capital:
Decrease/(increase) in debtors 1.6 4.4 (2.5)
Increase in creditors (3.3) (0.5) 11.6
-------------------------------------------- ----------- ----------- -------------
Cash generated from operations 32.1 37.5 72.1
-------------------------------------------- ----------- ----------- -------------
15 RELATED PARTY TRANSACTIONS
There have been no material changes in the related party
transactions described in the last annual report, other than those
disclosed elsewhere in this condensed set of financial
statements.
GLOSSARY OF TERMS
ADJUSTED NET ASSETS OR ADJUSTED SHAREHOLDERS' FUNDS
Net assets excluding the fair value of financial derivatives,
deferred tax on revaluations and goodwill arising as a result of
deferred tax
ADJUSTED NET GEARING
Net debt expressed as a percentage of adjusted net assets
ADJUSTED SOLIDITY
Adjusted net assets expressed as a percentage of adjusted total
assets
ADJUSTED TOTAL ASSETS
Total assets excluding deferred tax assets
ADMINISTRATION COST RATIO
Recurring administration expenses of the Investment Property
operating segment expressed as a percentage of net rental
income
BALANCE SHEET LOAN TO VALUE
Net debt expressed as a percentage of total assets less cash and
short-term deposits
CONTRACTED RENT
Annual contracted rental income after any rent-free periods have
expired
CORE PROFIT
Profit before tax and before net movements on revaluation of
investment properties, profit on sale of investment properties,
subsidiaries and corporate bonds, impairment of intangible assets
and goodwill, non-recurring costs, change in fair value of
derivatives and foreign exchange variances
DILUTED EARNINGS PER SHARE
Profit after tax divided by the diluted weighted average number
of ordinary shares
DILUTED NET ASSETS
Equity shareholders' funds increased by the potential proceeds
from issuing those shares issuable under employee share schemes
DILUTED NET ASSETS PER SHARE OR DILUTED NET ASSET VALUE
Diluted net assets divided by the diluted number of ordinary
shares
DILUTED NUMBER OF ORDINARY SHARES
Number of ordinary shares in circulation at the balance sheet
date adjusted to include the effect of potential dilutive shares
issuable under employee share schemes
DILUTED WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES
Weighted average number of ordinary shares in issue during the
period adjusted to include the effect of potential weighted average
dilutive shares issuable under employee share schemes
EARNINGS PER SHARE
Profit after tax divided by the weighted average number of
ordinary shares in issue in the period
EPRA
European Public Real Estate Association
EPRA EARNINGS PER SHARE
Profit after tax, but excluding net gains or losses from fair
value adjustments on investment properties, profits or losses on
disposal of investment properties and other non-current investment
interests, impairment of goodwill and intangible assets, movements
in fair value of derivative financial instruments and their related
current and deferred tax
EPRA NET ASSETS
Diluted net assets excluding the mark-to-market on effective
cash flow hedges and related debt adjustments, deferred tax on
revaluations and goodwill arising as a result of deferred tax
EPRA NET ASSETS PER SHARE
EPRA net assets divided by the diluted number of ordinary
shares
EPRA NET INITIAL YIELD
Annual passing rent less net service charge costs on investment
properties expressed as a percentage of the investment property
valuation after adding purchasers' costs
EPRA TOPPED UP NET INITIAL YIELD
Annual net rents on investment properties expressed as a
percentage of the investment property valuation after adding
purchasers' costs
EPRA TRIPLE NET ASSETS
EPRA net assets adjusted to reflect the fair value of debt and
derivatives and to include the fair value of deferred tax on
property revaluations
EPRA TRIPLE NET ASSETS PER SHARE
EPRA triple net assets divided by the diluted number of ordinary
shares
ERV (ESTIMATED RENTAL VALUE)
The market rental value of lettable space as estimated by the
Group's valuers
INTEREST COVER
The aggregate of group revenue less costs divided by the
aggregate of interest expense and amortisation of loan issue costs,
less interest income
LIQUID RESOURCES
Cash and short-term deposits and listed corporate bonds
NET ASSETS PER SHARE OR NET ASSET VALUE (NAV)
Equity shareholders' funds divided by the number of ordinary
shares in circulation at the balance sheet date
NET DEBT
Total borrowings less liquid resources
NET GEARING
Net debt expressed as a percentage of net assets
NET INITIAL YIELD
Annual net rents on investment properties expressed as a
percentage of the investment property valuation
NET RENT
Contracted rent less net service charge costs
OCCUPANCY RATE
Contracted rent expressed as a percentage of the aggregate of
contracted rent and the ERV of vacant space
OVER-RENTED
The amount by which ERV falls short of the passing rent
PASSING RENT
Contracted rent before any rent-free periods have expired
PROPERTY LOAN TO VALUE
Property borrowings expressed as a percentage of the market
value of the property portfolio
RENT ROLL
Contracted rent
REVERSIONARY
The amount by which the ERV exceeds the passing rent
SOLIDITY
Equity shareholders' funds expressed as a percentage of total
assets
TOTAL SHAREHOLDER RETURN
For a given number of shares, the aggregate of the proceeds from
tender offer buy-backs and change in the market value of the shares
during the year adjusted for cancellations occasioned by such
buy-backs, as a percentage of the market value of the shares at the
beginning of the year
TRUE EQUIVALENT YIELD
The capitalisation rate applied to future cash flows to
calculate the gross property value, as determined by the Group's
external valuers
DIRECTORS, OFFICERS AND ADVISERS
DIRECTORS
Henry Klotz (Executive Chairman)
Anna Seeley ø (Non-Executive Vice Chairman)
Fredrik Widlund (Chief Executive Officer)
John Whiteley (Chief Financial Officer)
Sten Mortstedt ø (Executive Director)
Malcolm Cooper * ++ (Non-Executive Director)
Joseph Crawley (Non-Executive Director)
Elizabeth Edwards ++ (Non-Executive Director)
ø
Christopher Jarvis ++ (Non-Executive Director)
Thomas Lundqvist (Non-Executive Director)
Philip Mortstedt (Non-Executive Director)
Lennart Sten ø (Non-Executive Director)
* Senior Independent Director
member of Remuneration Committee
++ member of Audit Committee
ø member of Nominations Committee
COMPANY SECRETARY
David Fuller BA, FCIS
REGISTERED OFFICE
86 Bondway
London
SW8 1SF
REGISTERED NUMBER
2714781
REGISTRARS AND TRANSFER OFFICE
Computershare Investor Services Plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol
BS99 7NH
Shareholder Helpline: 0870 889 3286
CLS HOLDINGS PLC ONLINE:
www.clsholdings.com
EMAIL:
enquiries@clsholdings.com
CLEARING BANK
Royal Bank of Scotland Plc
24 Grosvenor Place
London
SW1X 7HP
FINANCIAL ADVISERS
Elm Square Advisers Limited
10 Queen's Elm Square
London
SW3 6ED
STOCKBROKERS
Liberum Capital
Ropemaker Place, Level 12
25 Ropemaker Street
London
EC2Y 9LY
Panmure Gordon (UK) Limited
One New Change
London
EC4M 9AF
REGISTERED AUDITOR
Deloitte LLP
Chartered Accountants
2 New Street Square
London
EC4A 3BZ
FINANCIAL AND CORPORATE PUBLIC RELATIONS
Smithfield Consultants Limited
10 Aldersgate Street
London
EC1A 4HJ
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR AKADDKBKBQFD
(END) Dow Jones Newswires
August 17, 2016 02:00 ET (06:00 GMT)
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